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Pound to Canadian Dollar Exchange Rate Outlook: UK Retails Sales Boosts GBP/CAD

August 17, 2017 - Written by John Cameron

The Pound Canadian Dollar exchange rate has seen a positive move on Thursday afternoon, valued +0.15 per cent higher at 1.62979 at 18:00 GMT.

GBP/CAD clawed its way back up from an eight-month low earlier in the morning as the UK released its latest retail sales figures.

Pound (GBP) Rallies as Retail Sales Beat Forecasts



Sterling was able to find its feet again this morning as the UK’s latest retail sales figures came in higher than expected.

According to data released by the Office for National Statistics (ONS) sales grew 0.3% in July, beating expectations that they would slow to 0.2%.

With sales declining in nearly all sectors the jump last month was largely attributed to a recovery in food sales as they rose 1.5% after previously slumping by 1.1% in June.

Keith Richardson, managing director retail sector at Lloyds Bank said;

‘July’s wet weather might have dampened fashion sales but the supermarkets’ continued creativity together with a good month for homewares meant it was another good month for retailers overall.’

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‘Despite consumers finding their purses a little lighter each month, the supermarkets continue to find ways to help shoppers adapt their spending rather than rein it in – encouraging them to trade nights out for nights in and switch brands for own label, for example.’

However slightly taking the wind out of today’s figures was the move by the ONS to downwardly revise June’s sales data down from 0.6% to 0.3%, a notable decline that could have repercussions for the UK’s second quarter growth.

Canadian Dollar (CAD) Strengthened by Rising Oil Prices



Despite The Pound’s rally this morning the Canadian Dollar remains in a position of strength today as rising oil prices help to bolster the ‘Loonie’s appeal, especially in light of the US Dollar’s (USD) current weakness.

After posting losses in the past couple of sessions oil futures trended higher overnight, with Brent crude futures at $50.43 a barrel, up 0.3% from their previous closing price.

The latest rise was prompted by a larger than expected fall in US crude inventories as increased demand saw stocks fall by 8.94m barrels last week, far more than the 3.05m barrel decline that had been forecast.

Markets were upbeat as the data suggested that OPEC’s production cuts are finally beginning to have an impact on global supply levels over eight months after they were implemented.

William O'Loughlin, investment analyst at Australia's Rivkin Securities said;

‘If inventory declines continue at this pace, stocks will fall back below the five-year average in around two months. The pace of the declines indicates that the OPEC production cuts are having an effect, although the current oil price suggests that the market is sceptical about the longer-term prospects for rebalancing of the oil market.’

However with accompanying data yesterday revealing that US shale production reached its highest levels since mid-2015, some fear that OPEC could be fighting an uphill battle in order to stabilise oil prices over the long term.

GBP CAD Forecast: Canadian Inflation to Rise?



Looking ahead the GBP CAD exchange rate may come under pressure again at the end of the week’s session as Canada releases is latest CPI data.

Economists currently forecast that inflation will have risen to 1.2% in July recovering from a drop to 1% the month before.

However with the figures likely to still be lagging well behind the Bank of Canada’s (BOC) target range for inflation it could lead to the ‘Loonie’s gains to be tempered somewhat.

Meanwhile a lull in economic data could leave the Pound on the back foot for the remainder of the week’s session with investor possibly focusing instead on the UK government’s recent plans for Brexit, with a proposal for a ‘frictionless’ post-Brexit border with Ireland receiving some criticism for being unrealistic.

Current Interbank Exchange Rates



At the time of writing the GBP CAD exchange rate was trending around 1.6280 and the CAD GBP exchange rate was trending around 0.6137.

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